The launch of Ethereum-based exchange-traded funds (ETFs) in the United States has investors buzzing with excitement. Traders’ positions indicate a moderate degree of interest in these investment vehicles. According to K33 research, there is an expectation of around $4 billion flowing into spot Ethereum ETFs within the first five months after their launch. This projection is based on the explosive growth that Bitcoin ETFs experienced during their introduction.
Comparison with Bitcoin ETFs
K33 Research compared the assets under management in existing Ethereum-based exchange-traded products globally with similar Bitcoin products. The analysis also included the open interest (OI) in futures contracts on the Chicago Mercantile Exchange (CME), a popular marketplace for institutional investors. While the current open interest in ETH futures on the CME is 23% of the size of BTC futures, the average share of ETH futures has been around 35% of BTC futures since they began trading on the CME in 2021. This data suggests a strong institutional demand for ETH exposure in the US market.
The approval of spot Bitcoin ETFs led to a significant rally in the price of the digital asset, propelling it to new record highs. Analysts believe that the introduction of Ethereum ETFs could have a similar effect on ETH’s price, potentially causing it to outperform BTC after a period of underperformance. Bloomberg ETF analyst Eric Balchunas predicts that spot Ethereum ETFs could attract between 10% and 20% of the inflows seen by Bitcoin ETFs. This would be considered a successful launch by normal ETF standards.
The spot Ethereum ETF applicants have made strategic decisions to remove features from their filings that would have allowed for the staking of the fund’s assets. This move is likely aimed at addressing the Securities and Exchange Commission’s (SEC) concerns regarding staking, which the regulator views as potentially constituting unregistered securities. The SEC has taken action against cryptocurrency platforms offering staking services to US customers in the past. In Canadian Ethereum ETFs, 99% of assets under management do not involve staking, while in European products, the figure is 98%.
The anticipation surrounding the launch of spot Ethereum ETFs is building, with traders positioning themselves for potential inflows into these investment vehicles. The comparisons with Bitcoin ETFs and the regulatory considerations make the introduction of Ethereum ETFs an interesting development to watch in the coming months. Investors may see ETH’s price and demand surge as these new investment options become available in the US market.
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